LONDON — The Nigeria Sovereign Investment Authority (NSIA) expects to receive $100 million to $200 million this year from the government and the removal of fuel subsidies would boost the amount of cash available, its chief investment officer told a panel in London on Wednesday.
Newly inaugurated President Bola Tinubu pledged to remove fuel subsidies, a popular but costly benefit that has drained millions annually from government coffers.
Kola Owodunni, NSIA’s chief investment officer, told a panel at the Sovereign Wealth Fund Institute conference in London that the move would help bolster NSIA finances by allowing more oil revenue to reach the government.
Much of the excess revenue that would have gone to NSIA in recent years went to subsidies, Owodunni said.
“With the removal of subsidies … we expect to see more money,” he said.
Owodunni said NSIA received roughly $50 million last year, after getting virtually nothing in 2021.
Over the past eight years, Nigeria’s finances overall were constrained by myriad challenges facing Africa’s most populous nation and biggest oil exporter, including some years of low crude prices, high subsidy costs, the COVID-19 pandemic and, recently, oil theft that limited output.
However, Owodunni said they obtained money each year that was earmarked for projects in the presidential infrastructure fund. He added that Tinubu, perceived as more business-friendly than his socialist-leaning predecessor, would improve the investment environment.
Owodunni said an oil reform law signed by previous president Muhammadu Buhari in 2021 had changed the formula of what the NSIA would receive. It earmarked a certain percentage of money based on the price of oil, rather than the previous, more complicated formula that incorporated prices and production.
The new formula will take effect gradually, Owodunni said, as companies with production-sharing contracts with the government move to the new law as their previous contracts expire. Once all oil contracts are covered by the new law, he said the money coming the NSIA will rise sharply.
“We expect it to grow exponentially in 2024,” Owodunni said. (Reporting by Libby George in London Editing by Matthew Lewis)